The US markets closed sharply higher after a wild final hour of trading following a report that central banks are preparing coordinated action to provide liquidity after the Greek election. The CBOE volatility index closed below 22.
On the economic data front, weekly jobless claims unexpectedly
rose 6,000 to a seasonally adjusted 386,000 last week. Meanwhile, consumer prices dipped 0.3% in May, falling the most in over three years.
The current account deficit widened more than expected to USD 137.3 billion in the first quarter, the largest gap since the end of 2008.
Key data to watch out for in the US today
Industrial production data will be released today and consensus estimates indicate no growth coming in on that front.
European markets closed flat after data which showed that US jobless claims had risen.
The yield on Spain’s 10- year government bond hit 7% for the first time following the downgrade. Italian bond yields also came under pressure, pushing the country's three-year borrowing cost to above 5.3% in an auction.
Slew of downgardes
Meanwhile, ratings agency Egan-Jones downgraded France’s credit rating to "BBB+" from "A-" with a negative outlook, a day after the agency cut Spain to "CCC+" from "B." Egan-Jones says the social policies of French president Francois Hollande could jeopardize the nation's credit.
Moody's Investors Service has downgraded the long-term debt and deposit ratings for five Dutch banking groups. They downgraded four banks by two notches and one by a single notch. The agency said it had cut the ratings by two notches: to AA2 for Rabobank Nederland, to A2 for ING Bank and ABN Amro Bank.
The Asian markets are cautious on opening trade today and they will be closely eyeing the Bank of Japan's rate decision. The central bank is expected to keep the rates unchanged.
In the currency space, the dollar slipped on expectations of further quantitative easing by the Federala Reserve. The euro rose to 1.26 to the dollar, meanwhile the dollar index after staying steady at the 82 mark for few days fell below it.
Commodities
Nymex crude prices gain after the OPEC agreed to keep its collective oil output ceiling unchanged for the second half of the year at 30 million barrels per day.
Precious metal gold ekes out marginal gains following dismal US economic data.
Domestic Cues
The IT department does not expect any big-bang advance tax payment today. Sources indicate that oil companies could deliver a pleasant surprise this time, but other sectors remain under pressure.
The inflation for the month of May came in slightly higher than expected at at 7.55% making it tougher for the RBI to cut rates in its upcoming monetary policy on Monday. RBI Governor, D Subbarao said very categorically that inflation cannot be curbed unless growth is sacrificed.
National News
It is a crucial day ahead for the presidential race, the UPA is meeting today, and the Congress is likely to come out with its formal nominee. Mamata will be skipping the meet despite being in the capital.
All eyes are now on whether Pranab Mukherjee is named. Both Mamata and Mulayam are firm on their nominee APJ Abdul Kalam, but still there is no word from the former president if he's ready to contest elections. (curtsey : money control)
Rupesh Yatesh Dalal
Head Research Department
Head Research Department
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